Avon sold on Q3 news, but think long term

There are other negative elements to the release upon which investors are probably focusing. You've got the gross margin going down. You've got total debt on the rise. You've got operational cash flow for the nine-month period coming in less than the comparable frame. All of it adds up to a disheartening scenario.

Long-term shareholders should fear not, I would argue. Sure, Avon may be having a rough time today, but remember that the company has a decent amount of brand equity behind it. As I've said in the past, when it comes to brand equity and consumer products, I do tend to think of Procter & Gamble (NYSE: PG) first.

But I'll give Avon its due. Management is obviously having a tough time with currencies, but the team in place is doing its best to offset this conundrum with efficiency initiatives. Avon needs to go further in terms of getting its representatives excited about selling and moving the inventory as quickly as possible. And I noticed that advertising was down. Be careful with advertising, Avon. You want to keep the marketing initiatives up to push your various trademarks. Of course, as was pointed out, the advertising decline was driven in part by lower media prices. This is true. However, if I were in charge, I probably would have kept growth in this expenditure flat, and looked elsewhere to cut.

I don't believe Avon is a great trade at the moment, but like I say, if you own Avon for the long term, this is just one of those bumps in the road. Nothing wrong with holding on in this case.

Disclosure: I don't own any company mentioned; positions can change without notice.